Safran Sa · EURONEXT:SAF
Safran Sa — Investor Day (December 2021)
138 slides from Safran Sa's investor day presentation, Dec 2, 2021
Slide 1: Driving innovation for sustainable growth
Driving innovation for sustainable growth December 2, 2021
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING STATEMENTS This document contains forward-looking statements relating to Safran, which do not refer to historical facts but refer to expectations based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actu
Slide 3: Agenda
Agenda 01. 02. 03. 04. Chairman’s Perspectives Research Financial opening remarks and strategy & Technology Framework Q&A BREAK 05. Q&A Civil Engines 06. Q&A 07. CLOSING Aircraft Interiors ESG
Slide 4: Speakers
Speakers Ross McINNES Olivier ANDRIÈS Eric DALBIÈS Delphine DIJOUD Pascal BANTEGNIE Stéphane DUBOIS Chairman CEO EVP R&T Head of RISE Appointed CFO EVP Corporate of the Board and Innovation Program Human & Social (on video) Responsibility CIVIL ENGINES AIRCRAFT INTERIORS Jean-Paul ALARY François PLA
Slide 5: Chairman's opening remarks
01. Chairman’s opening remarks Ross McINNES, Chairman of the Board Driving innovation for sustainable growth
Slide 6: Perspectives & Strategy
02. Perspectives & Strategy Olivier ANDRIÈS, CEO Driving innovation for sustainable growth
Slide 7: Safran is rebounding from the Covid crisis with strong profitable growth
Safran is rebounding from the Covid crisis with strong profitable growth at the forefront of sustainable aviation 7 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party with
Slide 8: Safran ID card: 3rd global aerospace group (excl. airframers)
Safran ID card: 3rd global aerospace group (excl. airframers) Strong leadership positions Breakdown of 2020 adjusted revenue (€16,498M) by division Aerospace 46% 24,204 Aircraft Propulsion €7,663M EMPLOYEES Equipment, Defense and 42% 38,471 #1 WW through CFMI for narrowbody engines Aerosystems €6,89
Slide 9: CMD'18 ambitions delivered despite major crisis
CMD’18 ambitions delivered despite major crisis AMBITIONS ACHIEVEMENTS ▪ Complete the LEAP success story with best- ▪ 1st ramp-up achieved to 1,700 LEAP in-class OE and aftermarket, in cooperation delivered in 2019, with best-in-class with our partner GE Aviation reliability ▪ Successfully integrate
Slide 10: Safran well positioned to meet accelerating trends
Safran well positioned to meet accelerating trends INDUSTRY STRATEGY STRONG TRENDS ASSETS Air transportation Unique technology recovery & growth portfolio Driving Operational excellence innovation leveraging digital Decarbonization of aviation for sustainable Talented people growth Defense/Sovereign
Slide 11: Industry trends
1 INDUSTRY STRONG STRATEGY TRENDS ASSETS Air transportation Unique technology recovery & growth portfolio Driving Operational excellence innovation leveraging digital Decarbonization of aviation for sustainable Talented people growth Defense/Sovereignty Financial position global dynamic 11 SAFRAN -
Slide 12: Favorable long term market dynamics
Air transportation recovery & growth Favorable long term market dynamics Global air traffic (measured in RPK*) Global aircraft capacity (measured in ASK**) between 2019 and 2040 between 2023 and 2040 12,000 CAGR 2019-2040 Economic 2023-40: RPK growth ⩾ growth +4.2% +2.9% +2.3% 9,000 6,000 Fleet grow
Slide 13: Air traffic recovery gaining momentum
Air transportation recovery & growth Air traffic recovery gaining momentum Safran’s assumptions for narrowbody ASK (as a %age of 2019 same period) NARROWBODY Capacity (ASK) -28% as of 21st of November Domestic traffic leading recovery Global narrowbody capacity recovery expected by end 2022 WIDEBODY
Slide 14: In-service fleet: solid positions on most active aircraft
Air transportation recovery & growth In-service fleet: solid positions on most active aircraft NARROWBODY WIDEBODY ▪ Young & active fleet of CFM56-2nd generation ▪ Retirement of older generation aircraft, most aircraft with low Safran content: 747, 767, A340… High aircraft utilization during crisi
Slide 15: Equipment aftermarket dynamics
Air transportation recovery & growth Equipment aftermarket dynamics LANDING SYSTEMS ▪ Landing gear: periodic interval maintenance ▪ Wheels and brakes: per landing (same dynamic as engines) WELL-BALANCED exposure to OE and aftermarket AEROSYSTEMS ▪ Aerosafety (evacuation slides and oxygen systems): D
Slide 16: Future fleet: onboard high-runners
Air transportation recovery & growth Future fleet: onboard 4 high-runners NARROWBODY STRONG RAMP-UP WIDEBODY LOWER PRODUCTION RATES UNTIL ~2025 ▪ A320neo: strong order book and ramp-up LEAP has 60% market share on all A320 models ▪ A350 and 787 will dominate the widebody market for next 10/15 year
Slide 17: Business jets and helicopters
Air transportation recovery & growth Business jets and helicopters BUSINESS JETS HELICOPTERS ▪ Moderate impact of Covid ▪ Diversity of missions (military, emergency, US Biz Jets domestic flights +25% in July 2021 medical) vs 2019 (+5% international) Safran engines flew +15 % more in 2020 vs. 201
Slide 18: Safran is committed to net zero aviation by 2050
Decarbonization of aviation Safran is committed to net zero aviation by 2050… SAFRAN ACTIVE ON LEVERS TO ADDRESS NEARLY 90% OF CO2 REDUCTION TARGETS GHG emissions from commercial aviation (MtCO2e) Emissions reduction 2,500 contribution in 2050 2,000 Prepare disruptive technology 35-40% for next-gen
Slide 19: Dedicated roadmap on CO2 emissions from products Scope 3
… with a dedicated roadmap on CO2 emissions from products Scope 3* Decarbonization of aviation 1. Deliver technologies › RISE program: disruptive technologies for future narrowbody engine providing 20% fuel burn savings for an ultra-efficient NB aircraft with (30)% › Lightweight materials fuel burn
Slide 20: Defense & space activities: resilience and cross-fertilization
Defense/Sovereignty global dynamic Defense & space activities: resilience and cross-fertilization ▪ Geopolitical tensions ▪ Strong positions in defense & space programs Rafale fighter export dynamics ▪ Rising defense and space budgets (US, UK, France, India…) Other European, UK and US programs:
Slide 21: Industry trends and strategy
2 INDUSTRY STRONG STRATEGY TRENDS ASSETS Air transportation Unique technology recovery & growth portfolio Driving Operational excellence innovation leveraging digital Decarbonization of aviation for sustainable Talented people growth Defense/Sovereignty Financial position global dynamic 21 SAFRAN -
Slide 22: Unique technology portfolio
Unique technology portfolio Unique technology portfolio Others Breakdown of 2020 self-funded R&T 75% of self-funded R&T 19% for sustainable aviation €~4.2bn gross R&T spending Aircraft Systems over 2021-2025, of which: Propulsion Systems 7% €~2.8bn self-funded R&T 49% €338M €~1.4bn public fundin
Slide 23: Operational excellence
Operational excellence leveraging digital Operational excellence RATIONALIZED INDUSTRIAL "ONE SAFRAN" ACCELERATED DIGITAL PLAN FOOTPRINT OUR OPERATING SYSTEM IN 2021 ____ ____ TO OPTIMIZE ALL PROCESSES 2020 (Development, manufacturing, supply chain, Engineering 4.0: Seats (Camberley UK, Santa Maria
Slide 24: Focus on Safran's advanced data analytics capabilities
Operational excellence leveraging digital Focus on Safran’s advanced data analytics capabilities SAFRAN ANALYTICS OVERALL SAFRAN DATA CAPABILITIES ▪ Center of excellence in data analytics ▪ Data scientists & analysts with best in class platform • 160 data scientists & data analysts • 87 resources wi
Slide 25: Talented people
Talented people Talented people 76,430 employees (excluding temps) as of 30th September 2021 REACTION THROUGH CRISIS ROADMAP Safran’s employees have demonstrated: ▪ Ensure forthcoming ramp-up for production and services ▪ Agility ▪ Solidarity ▪ Develop and mature technologies for the ▪ Commitment ne
Slide 26: Strategy: organic growth and portfolio evolution
3 STRATEGY INDUSTRY STRONG TRENDS ASSETS Driving Air transportation innovation Unique technology recovery & growth portfolio for sustainable growth Operational excellence leveraging digital Decarbonization of aviation Talented people Defense/Sovereignty global dynamic 1 | Organic Growth Financial po
Slide 27: Aerospace Propulsion
1 | Organic Growth Aerospace Propulsion OUR STRENGTHS ▪ Large and young installed base of civil engines ▪ Leading position on fast-growing next generation fleet ▪ Fully-fledged engine manufacturer ▪ Execute new ramp-up in OE deliveries for both commercial and military applications (M88) ▪ Ensure smo
Slide 28: Equipment & Defense
1 | Organic Growth Equipment & Defense OUR STRENGTHS ▪ Long-standing high proficiency of main mission and safety critical systems ▪ Strong aftermarket business models (Wheels & Brakes, Landing gear, Evacuation slides…) ▪ Strong position on French, European and UK/US defense platforms ▪ State-of-the-
Slide 29: Aircraft Interiors
1 | Organic Growth Aircraft Interiors OUR STRENGTHS ▪ Operational excellence and customer confidence restored ▪ Leadership in design: world-class passenger experience for airline differentiation ▪ Provide unequalled passenger experience ▪ Achieve double-digit profitability when topline comes back 29
Slide 30: Portfolio evolution
2 | Portfolio evolution Portfolio evolution PORTFOLIO REVIEW ▪ Assessment of Zodiac Aerospace legacy business portfolio launched in 2021 ▪ Criteria to meet alignment with Safran’s DNA High barriers to entry (technology, mission critical, differentiation) Strong aftermarket Profitable growth ▪
Slide 31: CMD'21 ambitions
CMD’21 ambitions Execute new LEAP ramp-up and ensure smooth aftermarket transition from CFM56 to LEAP Leverage our leading positions in Equipment & Defense to grow organically and expand further our portfolio Achieve double-digit profitability in Aircraft Interiors when topline comes back Spearhead
Slide 32: Safran is rebounding from the Covid crisis
Safran is rebounding from the Covid crisis with strong profitable growth at the forefront of sustainable aviation 32 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party wit
Slide 33: Research & Technology
03. Research & Technology Eric DALBIÈS VP R&T and Innovation Driving innovation for sustainable growth
Slide 34: Research & technology resourced for successful execution
Research & technology resourced for successful execution R&T ROADMAPS SHARED RESOURCES ECOSYSTEM 40 roadmaps 500 Corporate scientists 30 Strategic partnerships TECHNOLOGIES SAFRAN TECH R&T CENTER SCIENTIFIC PARTNERSHIPS PRODUCTS 21% are women TECHNOLOGY PARTNERSHIPS INNOVATION 28% are 30 to 34 years
Slide 35: Continuous investment in next-generation technologies to address decarbonization
Continuous investment in next-generation technologies to address decarbonization MATERIALS POWER DIGITAL AND PROCESSES AND ENERGY TECHNOLOGY IDENTIFY AND IMPLEMENT DEVELOP NEW SYSTEMS GATHER, PROCESS AND MODEL innovative materials and technologies for energy INFORMATION to increase and processes for
Slide 36: Materials and processes
MATERIALS POWER DIGITAL AND PROCESSES AND ENERGY TECHNOLOGY IDENTIFY AND IMPLEMENT DEVELOP NEW SYSTEMS GATHER, PROCESS AND MODEL innovative materials and technologies for energy INFORMATION to increase and processes for products to tackle the environmental our productivity and deliver with higher pe
Slide 37: Materials and processes
MATERIALS AND PROCESSES Materials and processes Additive manufacturing for integrated and lightweight design 1 2 New metals for advanced heat resistant lightweight alloys/next generation high strength superalloys Next generation polymer composites 4 for high power to weight ratio 3 Ultra-hardened st
Slide 38: Additive manufacturing
1 MATERIALS AND PROCESSES Additive manufacturing ▪ A powerful lever for a wide range of aircraft equipment Weight savings and increasingly compact parts Buy-to-Fly dramatically improved (optimized procurement of raw material) Shortened lead times Structural Engine Casing: Hydraulic unit for
Slide 39: New metals
2 MATERIALS AND PROCESSES New metals ▪ New nickel-based superalloys to improve ▪ Race for high modulus steel for reliable and thermo-mechanical performance compact reduction gearboxes Mastering metallurgy of turbine disks Nitrited steels for higher fatigue strength Development of materials for
Slide 40: Ceramics
3 MATERIALS AND PROCESSES Ceramics HOTTER & LIGHTER: MAJOR LEVER FOR SAFRAN CERAMICS: DEDICATED SHARED ENGINE DECARBONIZATION CENTER OF EXCELLENCE Maximum temperature of turbine materials Strategic investment 10 000 sq.m facility 1,500°C 270 equipments At least Ceramics 110 engineers +200°C an
Slide 41: Polymer composites
4 MATERIALS AND PROCESSES Polymer composites LIGHTWEIGHT AND EXCELLENT SUPPORTED BY MECHANICAL PROPERTIES SAFRAN COMPOSITES R&T PLATFORM ▪ Disruptive propulsive architectures ▪ In connection with all Group companies and optimizing fuel consumption a rich network of partners (academic research, techn
Slide 42: Power and energy
MATERIALS POWER AND PROCESSES AND ENERGY DIGITAL TECHNOLOGY IDENTIFY AND IMPLEMENT DEVELOP NEW SYSTEMS GATHER, PROCESS AND MODEL innovative materials and technologies for energy INFORMATION to increase and processes for products to tackle the environmental our productivity and deliver with higher pe
Slide 43: Accelerate power and energy transition to enable aviation decarbonization
Accelerate power and energy transition to enable POWER AND ENERGY aviation decarbonization POWER / THRUST GENERATION Gas turbine Hybrid electric 4 Full electric Sustainable Aviation Fuels Hybrid turbofan Ultra-efficient engine 2 Hybrid propulsion system Electric motor Low Kerosene replacement Power-
Slide 44: RISE, an ambitious technology demonstration program
1 POWER AND ENERGY RISE, an ambitious technology demonstration program CONTEXT CFM’S ANSWER ▪ Enable carbon neutral aviation with ▪ 20+% fuel savings at engine level in 2035 disruptive aircraft engine compared to today’s most efficient engines Disruptive architecture: Open Fan ▪ Strong signal sent
Slide 45: Deliver technologies capable of 100% drop-in fuels
2 POWER AND ENERGY Deliver technologies capable of 100% drop-in fuels (SAF, e-fuels) OUR ACHIEVEMENTS OUR STRENGTHS ▪ Use of SAF on engine acceptance tests (target 35+% in ▪ Development of products for linefit and 2025) retrofit ▪ Strategic partnership with TotalEnergies ▪ Ground and in-flight demon
Slide 46: Maturing hydrogen aircraft technologies
3 POWER AND ENERGY Maturing hydrogen aircraft technologies 1. Support Airbus in-flight “EarlyDemo” to acquire knowledge TO PREPARE FOR LARGER about operation and emissions of a liquid H2 aircraft SCALE DEMONSTRATOR • Adaptation of an existing engine 2. Mature H2 technologies for aircraft equipment •
Slide 47: Unlock the potential of hybridization and electrification
4 POWER AND ENERGY Unlock the potential of hybridization and electrification ▪ A broad portfolio Helicopter (hybrid) Short Medium Range (hybrid turbofan) of technologies and products for electrification – hybridization Electrical Motor (smart) FCAS ▪ Wide range of functions (hybrid military engine a
Slide 48: Digital technology
MATERIALS POWER DIGITAL AND PROCESSES AND ENERGY TECHNOLOGY IDENTIFY AND IMPLEMENT DEVELOP NEW SYSTEMS GATHER, PROCESS AND MODEL innovative materials and technologies for energy INFORMATION to increase and processes for products to tackle the environmental our productivity and deliver with higher pe
Slide 49: Safran builds tools and methods based on advanced digital technology
DIGITAL TECHNOLOGY Safran builds tools and methods based on advanced digital technology INFRARED THERMOGRAPHY AI ASSISTED DECISION MAKING FOR METALLIC PARTS CONTROL TARGET TARGET New NDT* methods as an alternative to dye AI algorithm-based assisted decision on X-Ray penetrant inspection or magnetosc
Slide 50: Intensify R&T investment
Intensify R&T investment ▪ State-of-the-art on all key technologies ▪ Mature technology bricks adaptable to all airframers options ▪ Accelerate the technological response to decarbonization ▪ Disciplined, focused execution 50 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This document and the
Slide 51: Financial Framework
04. Financial Framework Pascal BANTEGNIE, Appointed CFO Driving innovation for sustainable growth
Slide 52: Coming out of the Covid crisis as a leaner and stronger company
Coming out of the Covid crisis as a leaner and stronger company LEANER STRONGER FOCUSED Structural progress on cost base Return to organic growth Portfolio pruning & bolt-on acquisitions Enhanced margin improvement Investing potential and solid cash generation for the next 20 years Disciplined capit
Slide 53: Robust business model & financial discipline performing throughout crisis
Robust business model & financial discipline performing throughout crisis Adjusted revenue Adjusted recurring operating margin Free cash flow €24.6bn Organic 15.5% €2.0bn decrease 100+bp > €1.5bn in low improvement €16.5bn single digits 10.2 % €1.1bn FY 2019 FY 2020 FY 2021 Guidance (uplifted in FY
Slide 54: Financial ambition
1| 2025 04. Financial ambition Financial Framework
Slide 55: Return to robust organic growth
Return to robust organic growth Adjusted revenue ▪ Aerospace Propulsion [€/$ spot 1.20] OE build rates: LEAP, Rafale and helicopter turbines CAGR Civil aftermarket: c. 15% CAGR 2021-25 2021-25 10+% ▪ Equipment & Defense €16.5bn OE build rates: nacelles, avionics, landing systems with strong ra
Slide 56: Mid-term targets for group margin
Mid-term targets for group margin ▪ 5+pts margin improvement 2021-25 Recurring operating margin (% of sales) [€/$ spot 1.20; €/$ hedge 1.16] 2025 Recurring EBIT to grow twice as fast as revenue ambition CAGR 2021-25: 20+% 20 16-18% ▪ Increased profitability mainly driven by growth in services ac
Slide 57: Lasting improvement on structural cost base
Lasting improvement on structural cost base STRUCTURAL PRODUCTIVITY GAINS TO BE RETAINED COVID CRISIS EXCEPTIONNAL MEASURES TO FADE OUT END 2022-23 Footprint Personnel costs Optimization of industrial footprint (geographical clustering) Capping of employee profit sharing and accelerated restruct
Slide 58: Moving parts in margin and indicative phasing
Moving parts in margin and indicative phasing Incremental impact on margin Positive Neutral Negative Accelerated margin expansion anticipated in 2024-2025 58 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This document and the information therein are the property of Safran. They must not be co
Slide 59: Mid-term margin targets by division
Mid-term margin targets by division ▪ Aerospace Propulsion (2020 recurring EBIT €1.2bn) 2025 Civil aftermarket growth driven by young narrowbody engines fleet ambition Services in helicopter turbines 20+% 20% OE build rates: LEAP & M88 engines 15.6% LEAP OE breakeven at the latest in 2025 c.
Slide 60: Focus on CFM56 & LEAP aftermarket activities
Focus on CFM56 & LEAP aftermarket activities ▪ Gradually transitioning from spare parts sales (CFM56 is 85% spare parts and T&M) to rate per flight hour (LEAP will trend toward 60-70% RPFH by 2030 before slowly decreasing over time) T&M: revenue, cost and cash at shop visit RPFH: sales recognize
Slide 61: USD hedging to protect economic performance
USD hedging to protect economic performance ▪ A proven expertise and comprehensive portfolio to EURUSD rate reduce FX volatility Protecting the economic performance on a 4-year horizon $30+bn portfolio mixing forward sales and derivative instruments with KO* barriers ▪ A consistent accounting me
Slide 62: Around €10bn FCF generation across 2021-25
Around €10bn FCF generation across 2021-25 Free Cash Flow Cumulated cash generation and use of cash over 2021-25 c. 60% growth over 2021-25 > €1.5bn c. €10bn €1.1bn 2020 2021E 2022E 2023E 2024E 2025E Cash generation driven by EBITDA c.2x over 2021-25 Upscaling EBIT to FCF conversion ratio to 70% on
Slide 63: Main working capital factors
Main working capital factors Total advance payments (in €bn) Inventories and WIP Deferred income (in €bn) Projected balance sheet Projected balance sheet Projected weight on balance sheet €4.1bn €6.1bn 133 days +50% €3.6bn 2020 2021E 2022E 2023E 2024E 2025E 2020 2021E 2022E 2023E 2024E 2025E 2020 20
Slide 64: Capex focused on areas generating growth & cost savings
Capex focused on areas generating growth & cost savings Total Capex cash spending (in €M) 1200 ▪ Growth in capacity 900 LEAP MRO shop €0.8bn ▪ Digital 600 Roadmap towards Industry 4.0, cybersecurity 300 ▪ Low carbon project Energy supply and consumption, use of SAF* for engine tests 0 2020 2021E 202
Slide 65: Investing for organic growth
Investing for organic growth Total R&D expenses* (in €M) R&D sold to customers + external funding Significant funding from French government and EU (€1.4bn expected over 2021-25) €1.2bn Increasing self-funded R&T €0.9bn 75% directed towards sustainable aviation +70% over 2021-25; growing from
Slide 66: Business model driving performance over 2021-25
Business model driving performance over 2021-25 ▪ Revenue 10+% CAGR ▪ Recurring operating margin 5+pts margin expansion ➔ 16-18% ▪ Free cash flow 70% EBIT conversion ratio 66 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This document and the information therein are the property of Safran. Th
Slide 67: Capital allocation
2| Capital allocation 04. Financial Framework
Slide 68: Capital allocation
Capital allocation ACTIVE STRONG 40% DIVIDEND PORTFOLIO BALANCE SHEET PAYOUT MANAGEMENT 68 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party without the prior written aut
Slide 69: Active portfolio management
Active portfolio management ▪ 30% of former Zodiac Aerospace activities under ▪ M&A strategy focused on bolt-on acquisitions review Redeploying divestment proceeds towards targeted bolt-on ▪ €130+M cash proceeds from divested activities over 2019-21: ▪ €50+M invested in acquisitions over 2019-21:
Slide 70: A strong balance sheet
A strong balance sheet Debt maturity schedule (€M) Main long term debt instruments ▪ Proactive financing transactions in 2020-21 1200 Conversion price and longer-term debt profile @107.80€ 1000 Conversion price ▪ Enhanced Safran’s access to debt capital markets To be refinanced with 800 €500m EIB lo
Slide 71: Commitment to a strong investment grade profile
Commitment to a strong investment grade profile Net debt/EBITDA 4 Euro PP 3.5x covenant 3 USPP 2.5x covenant (3.0x acquisition spike) 2 1.04x target: below 1x 1 ▪ Safran coming out of the crisis with sound leverage 0 ▪ Deleveraging through FCF generation towards a net cash position by 2023 -1 ▪ In t
Slide 72: Shareholder returns: TSR CAGR 2011-21 = +15.0%
Shareholder returns: TSR CAGR 2011-21 = +15.0% Safran dividend (FY 2011-20) Safran share performance vs. CAC 40 index (2011-21) 500% 1.82 Dividend 450% SAFRAN +326% (€113) as of 11/19/2021 1.52 1.60 suspended 400% 1.38 in 2020 350% 1.12 1.20 (FY 2019) 300% 0.96 and resumed in 2021 250% (FY 2020) 200
Slide 73: Civil Engines
05. Civil Engines Jean-Paul ALARY CEO Safran Aircraft Engines François PLANAUD VP Services & MRO Safran Aircraft Engines Driving innovation for sustainable growth
Slide 74: OE LEAP
1| OE LEAP O05. Civil Engines S SAFRAN
Slide 75: LEAP: a growing reputation & always more reliable
LEAP: a growing reputation & always more reliable MORE THAN ALWAYS MORE RELIABLE MORE THAN Reliability 1,600+ 99.95% 13M engine flight hours & Life cycle maint. cost same as CFM56 aircraft delivered powered by departure reliability (end Sept. 2021) 79 LEAP-1A operators 62 LEAP-1B operators -15% cons
Slide 76: LEAP: a winning engine
LEAP: a winning engine ▪ LEAP-1A/-1B/-1C market share of 72% of the entire narrowbody market & 60% across all A320neo family main models ▪ The largest engine order of the market: Indigo with 590 aircraft (A/C), 34 already flying ▪ Firm backlog: 10,300+ engines (end of September 2021), of which 1,816
Slide 77: LEAP production: set to hit 2023 run rate
LEAP production: set to hit 2023 run rate Double production over the next two years 737 MAX & RAMP-UP 1 RAMP-UP 2 Covid crisis +15% 2,000+ 2,000+ ~2,000 x2,2 1,736 815 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E LEAP CFM56 77 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This docum
Slide 78: Enhancing robustness for the second LEAP ramp-up
Enhancing robustness for the second LEAP ramp-up RAMP-UP 1 737 MAX & Covid crisis RAMP-UP 2 Leveraging the first ramp-up Supplier monitoring & support Thorough supply chain risk throughout the crisis management ▪ Comprehensive industrial ▪ LEAP-1B minimum flow ensured ▪ Formal management engagement
Slide 79: LEAP cost of sales reduction
LEAP cost of sales reduction LEAP cost of sales Variable cost portfolio loaded to deliver at least 15% cost reduction -10% -10% from 2021 to 2024 0% 0% Excluding subamortization of fixed costs Comprehensive action plan to -15% manage fixed costs and leverage future ramp-up 2018 2019 2020 2021E 2022E
Slide 80: Driving LEAP in-house cost reduction
Driving LEAP in-house cost reduction 4 main pillars to achieve best in class manufacturing excellence with a clear operating culture LEAN & RIGHT FIRST TIME Design Quality State-of-the-art Enhancing existing manufacturing optimization robustness greenfield BENCHMARK RESULTS Material change: Closed d
Slide 81: Driving LEAP supply chain cost reduction
Driving LEAP supply chain cost reduction 3 main drivers to achieve best cost supply chain efficiency Supply chain LEAP Strategic sourcing streamlining together 4.0 BENCHMARK 1 new Value Stream Mapping per RESULTS Global commodity package: Raw materials recycling: month: up to 30% cost reduction up t
Slide 82: LEAP in a nutshell
LEAP in a nutshell READY TO OE GROSS MARGIN: LEAP RAMP-UP BREAKEVEN IS DELIVERING! AT THE LATEST IN 2025 AGAIN 82 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party withou
Slide 83: Aftermarket
2| Aftermarket 05. Civil Engines
Slide 84: Narrowbody traffic main driver of Safran aftermarket
Narrowbody traffic main driver of Safran aftermarket Narrowbody capacity (World ASK) ▪ Narrowbody traffic more resilient and recovering Safran’s assumptions for narrowbody ASK faster than widebody (as a %age of 2019 same period) ▪ Expect narrowbody capacity (ASK) to be back to 2019 level by end of 2
Slide 85: 2020-2021 aftermarket highlights: CFM56-5B/-7B
2020-2021 aftermarket highlights: CFM56-5B/-7B SHOP VISITS SPARE PARTS USAGE AT SHOP VISIT ▪ Steady shop visits recovery, mainly driven by ~ Stable revenue per shop visit in 2020/21 engine cycles CFM56-5B/-7B shop visits per quarter (source: Safran) + - Inventory at MROs Catalog Price increase impac
Slide 86: 2020-2021 aftermarket highlights: LEAP
2020-2021 aftermarket highlights: LEAP ▪ Solid utilization levels as airlines prioritize recent models Quarterly Cycles LEAP-1A/-1B (Index 100 in Q1 2019) 200 LEAP cycles x2 as of Q3 2021 compared to Q3 2019 ▪ Long term service agreements portfolio continues to grow 42% of LEAP engine orders inc
Slide 87: Aftermarket main drivers
Aftermarket main drivers Traffic assumptions, Allocation of traffic by generation of aircraft fleet in service Utilization, area of operation CYCLES 1 Technical Operating data (Flight leg, temperatures…) ENGINE REMOVALS parameters Hardware durability, Life Limited Parts (LLP), EGT*… Airlines
Slide 88: CFM56-5B/-7B: a very young fleet
CFM56-5B/-7B: a very young fleet CFM56-5B/-7B Fleet by age CFM56-5B/-7B fleet shop visit ranks 25% ■ No shop visit performed 20% ■ 1 shop visit 15% 2021 performed 2025e 23,000 ~19 000 10% Engines* ■ 2+ shop visits Engines* performed 5% 0% 0 - 4 years 5 - 8 years 9 - 12 years 13 - 16 years 17 - 20 ye
Slide 89: CFM fleet utilization outlook by engine generation
CFM fleet utilization outlook by engine generation 1 CFM flight cycles forecast Millions of cycles ▪ Strong cycles ramp ahead for LEAP: 15 x2.4 from 2022 to 2025 10 ▪ CFM56-5B/-7B fleet specific dynamics vs pre-downturn outlook 5 Lower total yearly utilization cycles A younger fleet 0 2018 2019
Slide 90: CFM56-5B/-7B and LEAP shop visits outlook
CFM56-5B/-7B and LEAP shop visits outlook 2 CFM worldwide shop visits ▪ CFM56-5B/-7B 4000 Recovery to 2019 levels expected by 2024 Hitting peak level in 2025-2026 at around 2,500 SV Possible upside as CFM56-5B/-7B SV’s will primarily benefit from potential higher traffic 2000 ▪ LEAP Relaying
Slide 91: Net revenue per CFM56-5B/-7B shop visit
Net revenue per CFM56-5B/-7B shop visit 3 SHOP VISITS 1 & 2 MAIN DRIVERS AND MARKET DYNAMICS AS A PERCENTAGE OF YEARLY -5B/-7B SV ▪ Higher proportion of shop visit #1 and #2 CMD ’18 view CMD ’21 view than pre-crisis (younger fleet) 2018 2025E 2021 2025E Improved shop visit mix 75% >66% 75% 75% ▪ A
Slide 92: CFM56-5B/-7B spare parts consumption
CFM56-5B/-7B spare parts consumption CMD '18 ▪ Returning to 2019 levels around Upside 2024 potential ▪ Prolonged high runrate over 2025/2028 period 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E SIGNIFICANT FLOW OF REVENUE FOR 10+ YEARS 92 SAFRAN - CAPITAL MARKETS DA
Slide 93: CFM56 and LEAP contribution to Civil Aftermarket
CFM56 and LEAP contribution to Civil Aftermarket Sales in USD for spare parts and service contracts for CFM56 (all generations) and LEAP engines contributing to Safran’s Civil Aftermarket Index* Index 2021E = 100 LEAP relaying CFM56 growth from 2025 Robust increase going forward: high single digit C
Slide 94: LEAP service contracts: fleet and contract management
LEAP service contracts: fleet and contract management ▪ Enhanced Fleet Management: OEM expertise & digital tools, key enablers Real time active fleet monitoring: data collection, early signals detection and analysis, digital twin Proactive and predictive analytics & remote diagnostics Optimize
Slide 95: LEAP service contracts: MRO ramp-up and cost management
LEAP service contracts: MRO ramp-up and cost management ▪ Industrial ramp-up readiness Modernizing and upscaling current MRO network Building additional MRO facilities: launch in 2022 for EIS in 2025 Monitoring capacity increase & demonstrating rates Embarking 3rd party MRO’s ▪ Maintenance c
Slide 96: A robust aftermarket outlook
A robust aftermarket outlook ▪ Narrowbody traffic driving Safran civil aftermarket ▪ A young CFM56 fleet well positioned to benefit from recovery Returning to pre-crisis level for shop visits and spare parts sales in 2024, followed by a high runrate until end of the decade ▪ LEAP will take over sust
Slide 97: Aircraft Interiors
06. Aircraft Interiors Vincent MASCRÉ CEO Seats Jorge ORTEGA CEO Cabin Driving innovation for sustainable growth
Slide 98: Safran Seats
1| Safran Seats 05. Aircraft Interiors
Slide 99: Safran Seats at a glance
Safran Seats at a glance Successful transformation Renewed portfolio & momentum continues & innovation dynamics 32% market share of a reduced post Covid market Business streamlined On track to world leading & break-even point improved position & double digit by 40% profitability 99 SAFRAN - CAPITAL
Slide 100: A successful transformation
A successful transformation THE IN-DEPTH BUSINESS PROCESS RE-ENGINEERING LAUNCHED IN 2018 IS BEARING FRUIT: For our customers Internally 100% on time deliveries to airframers since end of 2019 Health & safety: accidents divided by 3 Non-quality divided by 5 Purchasing savings above 5% per ye
Slide 101: Renewed portfolio & Innovation dynamics
Renewed portfolio & Innovation dynamics ▪ Safran Seats is now offering to Airlines decision makers brand new products from Economy to First Class: Z200 Z400 Optima Skylounge Core Versa A few other undisclosed Short & medium range economy Long range economy Long range business Long range business Lon
Slide 102: A streamlined business
A streamlined business ▪ Before the crisis, integration synergies with Safran Group were delivering around €50M savings per year for Seats ▪ Major restructuring has been swiftly executed to adapt the business to market conditions: (40)% on headcount, from 7,745 to 4,735 (end of Q3 2021) Closure
Slide 103: Aircraft seating market: road to recovery
Aircraft seating market: road to recovery ▪ Demand shock from Covid crisis: -60% on sales in 2021 vs 2019 ▪ No consolidation of the market so far ▪ Recovery has started Airlines have restarted seating projects, as key to passenger experience and airline differentiation Retrofit opportunities ris
Slide 104: Safran Seats objective
Safran Seats objective In a market starting to recover, ▪ With a renewed product portfolio enabling solid book to bill ratio, ▪ With streamlined operations, ▪ Delivering to customers improvements from business transformation Safran Seats confirms its readiness to achieve a leading position on aircra
Slide 105: Safran Cabin
2| Safran Cabin 05. Aircraft Interiors
Slide 106: Cabin at a glance
Cabin at a glance THE MARKET SAFRAN CABIN ▪ $6.7bn pre-pandemic global market ▪ #1 worldwide with ~22% market share Closest competitor is 16% ▪ Increasing percentage of SFE* largely due to delay in widebody recovery Complete cabin and cargo product offering differentiates Safran ▪ Price competit
Slide 107: Innovative products drive growth (1/2)
Innovative products drive growth (1/2) CRYSTAL CABIN AWARD FIRST AIR FRANCE A320 RETROFITTED FOR BEACON CLEAN LAVATORY WITH ECOS SHELF BINS ▪ Clean Lavatory concept ▪ Air France retrofits 24 A320s with Safran Cabin ECOS Shelf Bins External sanitizing station with waste container ▪ ECOS "Efficient
Slide 108: Innovative products drive growth (2/2)
Innovative products drive growth (2/2) FULL RANGE OF CARGO CONTAINERS & PALLETS COOL TROLLEY ▪ Newly developed Fire Resistant Containers ▪ Trolleys with full-size insulation and Safe transportation of li-ion batteries and re-useable cooling cassettes; a green smartphones alternative to dry-ice R
Slide 109: Safran Cabin adaptation continuing (1/2)
Safran Cabin adaptation continuing (1/2) ▪ Aggressive transformation driving significant operating/financial performance improvement ▪ Covid necessitated further aggressive response to adapt to new market reality Headcount worldwide reduced from ~14,200 January, 2020 to ~9,800 Q3 2021 ▪ Continuing
Slide 110: Safran Cabin adaptation continuing (2/2)
Safran Cabin adaptation continuing (2/2) SITE AND PROCESS OPTIMIZATION ▪ Fewer, larger sites for more efficiency 4 sites closed in 2020, 3 closed by end of 2021, additional planned for 2022 Improved level loading and implementing best practices across Safran Cabin ▪ One Safran process standards
Slide 111: Safran Cabin towards double digit profitability by 2025
Safran Cabin towards double digit profitability by 2025 ▪ Recovery accelerating ➔ Target to breakeven in 2022 ▪ Core competencies & business process re-engineering driving capability and cost synergies Engineering Supply chain & purchasing Program management ▪ Continuing to invest in innovation-driv
Slide 112: ESG
07. ESG Olivier ANDRIÈS CEO Stéphane DUBOIS EVP Corporate Human & Social Responsibility Driving innovation for sustainable growth
Slide 113: Summary: ESG strategy 2025
Summary 1 | ESG strategy 2025 2 | Reduce emissions from operations 3 | Be an exemplary employer 07. ESG 4 | Embody responsible industry 5 | Contribute to a safer world
Slide 114: ESG strategy 2025
1| ESG 07. strategy 2025 S SAFRAN
Slide 115: Contributing to Safran purpose
ESG strategy 2025... …contributing to Safran purpose "Thanks to the commitment of our employees, proven innovation and operational excellence, Safran designs, builds and supports high-tech solutions to contribute to a safer, more sustainable world, where air transport is more environmentally friendl
Slide 116: ESG strategy 2025: 4 pillars and 12 commitments
ESG strategy 2025: 4 pillars and 12 commitments Aligned with 12 of the 17 UN’s Sustainable Development Goals 1 2 3 4 Decarbonize Be an exemplary Embody responsible Affirm our commitment aviation employer industry to citizenship 1. Make carbon neutral 4. Accelerate training 7. Uphold the highest 10.
Slide 117: A dedicated ESG governance
A dedicated ESG governance To embark all Group employees INTERNAL INNOVATION, TECHNOLOGY BOARD OF DIRECTORS & CLIMATE COMMITTEE & EXTERNAL 1/YEAR YOUNG EXTERNAL GENERATION STAKEHOLDER CONSULTATION CONSULTATION CLIMATE CHALLENGE 1/YEAR (from 2022) EXECUTIVE COMMITTEE 2/YEAR STEERING COMMITTEE 1/YEAR
Slide 118: ESG driving CEO compensation
ESG driving CEO compensation 1. CEO’s annual variable compensation (in 2021) 2. Long-term incentive plan ESG criteria Working Capital 7% Management of Covid ▪ To be implemented in 2022 Other individual crisis and relations with Free Cash Flow 20% objectives aircraft manufacturers ▪ Projected ESG dri
Slide 119: Safran ESG ratings
SAFRAN ESG ratings Safran Peer comparison Rating from “CCC” to “AAA” Above the average of 31 companies (“AAA” being the highest) BBB in the A&D sector August 2021 Rating evaluating ESG risk level, with the lowest rating corresponding to 22.9 2nd out of 91 companies the best non financial performance
Slide 120: Reduce emissions from operations
2| Reduce 07. emissions ESG from operations
Slide 121: Towards a full Scope 3 disclosure in 2022
Towards a full Scope 3 disclosure in 2022 2021(1) 2022(1) ▪ Emissions from use of products: ▪ Full declaration for all categories, initial partial declaration of direct notably for the use of products emissions from engines: across the Group scope • 41.9 Mt CO2eq. in 2019, • 20.6 Mt CO2eq. in 2020 ▪
Slide 122: Emissions from operations: 30% reduction target by 2025
Target 30% emissions from operations reduction by 2025 Scope 1&2* EMISSIONS FROM OPERATIONS** 700,000 600,000 REDUCTION Emissions (t CO2 eq.) 500,000 30% 400,000 by 2025 300,000 vs. 2018 200,000 100,000 0 2018 2019 2020 2021 2022 2023 2024 2025 Safran’s CO2 emissions CO2 emissions Emissions without
Slide 123: Levers to reduce emissions from operations
Levers to reduce emissions from operations Scope 1&2 ENABLERS 2020 AND 2021 ACTIONS › Internal carbon price (shadow pricing) in investment process Drive the change › Low-carbon targets in top management evaluation › Low-carbon integrated into mid-term planning exercise Use less energy › New low-carb
Slide 124: Be an exemplary employer
3| Be an exemplary 07. employer ESG
Slide 125: The fundamentals of our HR Responsibility
The fundamentals of our HR Responsibility 1 ENSURE DIVERSITY MAKE THE DIFFERENCE AND INCLUSION 2 DEVELOP SKILLS AND BUILD SHAPE OUR FUTURE OPPORTUNITIES 3 CREATE A TRUSTWORTHY DARE TO ACT & INNOVATE WORK PLACE 4 PROMOTE ARE PART COLLABORATION OF THE TEAM AND MUTUAL SUPPORT 125 SAFRAN - CAPITAL MARKE
Slide 126: Develop an inclusive culture to be truly differentiated
Develop an inclusive culture to be truly differentiated A COMMITMENT TO ACTIONS ▪ Develop training on diversity and non-discrimination for all employees › Early 2022, accelerate and operate a deeper transformation ▪ Communicate & raise awareness through conferences & webinars on stereotypes and unco
Slide 127: A strong commitment to gender diversity
A strong commitment to gender diversity 3 AMBITIONS 2025 KEY OBJECTIVE 1. Operate a change in corporate culture, % of women in senior management (base: 570*) towards more inclusion and professional mixity Improve our score on the gender equality index(1) (2021: 89/100) 22% Sensitization, trainin
Slide 128: Safran: a leader in skills development
Safran: a leader in skills development AN ATTRACTIVE GROUP 3RD in Forbes latest ranking in A&D sector Signature of the New French and European agreements in line with the European Implement common base of social measures Pact for Skills for Aerospace and Defense launched on 16 November 2020 Support
Slide 129: Embody responsible industry
4| Embody 07. responsible ESG industry
Slide 130: Maintain culture of ethics and integrity
Maintain culture of ethics and integrity A ROBUST TRADE COMPLIANCE PROGRAM 2025 OBJECTIVE ▪ Signatory of the United Nations Global Compact, classified as advanced, the highest standard in terms of ESG performance ▪ Tone at the top: commitment reflected in a representation letter signed by CEO every
Slide 131: Strengthen responsible relationships with suppliers and subcontractors
Strengthen responsible relationships with suppliers and subcontractors TODAY TOMORROW Support suppliers during Covid crisis Prepare the supply chain for the future challenges Signature of the responsible purchasing Gifas Charter R&T partnerships with suppliers to develop specific materials to me
Slide 132: Contribute to a safer world
5| Contribute 07. to a safer world ESG
Slide 133: Safran is a responsible actor in a highly regulated defense industry
Safran is a responsible actor in a highly regulated defense industry ▪ Respects the following international regulations signed by France1 REGULATIONS / ▪ Comply with the French 2017 law on the Corporate Duty STRICT of Vigilance EXPORT CONTROL COMPLIANCE ▪ Subject to the French regulation regarding d
Slide 134: Safran will continue to provide the best of its technology
Safran will continue to provide the best of its technology to contribute to stability, key to sustainability ▪ Safran contributes to French nuclear deterrence which allows peace, security and independence of France and Europe NUCLEAR INDIRECT through DETERRENCE ArianeGroup ▪ Aligned with French nati
Slide 135: How Safran embraces ESG stakes?
How Safran embraces ESG stakes? ▪ Decarbonization: from a long time technical effort to a structural step change ▪ Diversity: legacy starting point and strong commitment to accelerate ▪ Stability: best of Safran’s technology to serve France’s sovereign choice of defense 135 SAFRAN - CAPITAL MARKETS
Slide 136: Closing remarks
S SAFRAN CAPITAL MARKETS . DAY 2021 TT MARKS
Slide 137: Key takeaways
Key takeaways ▪ Positive outlook for long term growth in air transportation ▪ Global leadership positions ▪ Onboard high-runners, young civil engines fleet ▪ Leaner organization to deliver increased profitability ▪ Accelerated pace of investment for decarbonization ▪ Portfolio evolution consistent w
Slide 138: Safran is rebounding from the Covid crisis with strong profitable growth
Safran is rebounding from the Covid crisis with strong profitable growth at the forefront of sustainable aviation 138 SAFRAN - CAPITAL MARKETS DAY 2021 / December 2, 2021 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party wi